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UK Tax Calculator

Total tax paid (approximately)*

UK TAX RETURNS FOR UK Non-Residents

Are you living and working in the UK but are a non resident? The taxation of residents and non-residents in the UK is very different but there is a Statutory ‘Residence’ Test to help you determine whether you are resident or not.

The test applies from the tax year 2013/14 as different rules apply for the years up to 2012/13. However, under both rules and without exception, you will be UK tax resident if you spend 183 days or more in the UK in a tax year.

How long you spend in the UK as compared with time spent in other countries

Whether you have been resident in the UK in previous tax years.

It’s important to note that you are still entitled to claim personal tax allowances as a non-resident if you are a UK, or European Economic Area (EEA) national. The personal allowance of £11,850 in 2018/19 can often cover any UK sources of income that a taxpayer may have.

Non-residents of the UK often need to fully reconcile their positions through filing a UK tax return. If you’re not sure if you need to file a UK tax return or not, taxback.com can check your circumstances and clarify this. We can also check if you’ve overpaid tax and you’re due to claim a UK tax refund.

Useful UK Non-Resident Tax Information

Broadly speaking, if you are UK resident, you are taxable on your worldwide income in the UK for the period you are resident.

If you are considered non-resident, your UK income tax liability is normally restricted to earnings from employment carried on in the UK or on UK source personal income, such as interest on UK bank accounts, UK dividends and rental income from UK properties.

You are still entitled to personal tax allowances as a non-resident if you are a UK, or European Economic Area (EEA) national.

The personal allowance of £11,850 in 2018/19 can often cover any UK sources of income that a taxpayer may have. For reasons such as this, non-residents of the UK often need to fully reconcile their positions through the preparation of a UK tax return. Remember, that in the UK the onus in generally on the taxpayer to tell HMRC if they think they need to complete a tax return.

Whether you are 'resident' or not may be complex, so you will need to take advice on your specific circumstances.

UK tax can be a complex area to navigate and there are many rules on whether you are deemed ‘resident’ or not. When you register with taxback.com, a member of our UK tax team will talk to you about your individual circumstances. They will check how long you’ve been in the UK, what type of work you do and where you pay tax. You may be able to avail of UK tax relief or deductions and if so, we will arrange that for you.

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Taxback.com Non-Resident Case Studies

UK Non-resident Cases in action

Mrs S left the UK permanently to move to South Africa. This meant that she became UK non resident from the date of her departure. Mrs S's only source of UK income was bank interest arising on the savings in her UK bank account.

As bank interest in the UK is normally paid out after 20% tax has been deducted, we were able to help Mrs S reclaim this tax because the bank interest fell under her personal allowance.

Because she didn’t expect a tax liability in the future either, we were also able to advise her to complete Form R85 so that the UK bank will pay her on a gross basis going forward.

Alternatively, Mrs S, could have considered moving the funds offshore to eliminate UK tax.

Mr. R.

Mr R, a Belgian national, was working for a UK company, on their payroll and having full PAYE tax applied to his earnings.

However, Mr R's role was an international one and therefore he spent little time actually visiting or working in the UK. Mr R was correctly taxable on the income that related to the days he physically worked in the UK but because did not spend enough time in the UK to trigger residency, we were able to exclude the income related to his overseas business trips from his UK tax liability and thus reclaim a portion of his PAYE.

When Mr R received a termination payment from the UK company, we were pleased to advise him of a special rule - 'foreign service relief' which meant that Mr R's complete termination payment could be excluded from UK tax (even though a portion of it would have been calculated in respect of UK service). This meant that all the tax that was deducted on it could be reclaimed.

Mr. & Mrs. H.

Mr and Mrs H left the UK indefinitely to move to Australia same time ago. They retained their UK property and let it out to tenants.

Where a property is let by a landlord who goes abroad for six months or longer, tax at 20% must be withheld from the rent. However, this may not be the final liability, as a taxpayer can deduct a number of expenses through a tax return when determining the profit, including attributable mortgage interest, water rates, the cost of maintenance, repairs, insurance and management and a flat rate 10% allowance of rents for 'wear and tear' if the property is let furnished.

We explained this to Mr and Mrs H and performed the relevant calculations. Because their net profit was below the personal allowance, we were able to file tax returns going back 4 years for them to reclaim the non- resident landlord tax. We were also happy to assist them to complete HMRC’s form NRL1 to receive the rental payments in full going forward.

Mr W

Mr W is a Danish national. He usually works for a Danish company but was sent to work on a UK project - building a wind farm in a section of the North Sea.

Mr W had filed a UK tax return declaring the earnings related to his UK windfarm wor, assuming this was the correct and proper thing to do. However, when we looked into his case he found that he lived on a floating hotel for the duration of this project. This hotel was outside the UK territorial water limit. Furthermore, the wind farm was actually in international, not UK, waters.

We were therefore able to reverse the initial tax return and send in an amendment restating Mr W's position as that of a non resident with no UK source income and claiming back all the UK taxes that Mr W had paid on his ‘UK’ employment earnings.

Mr C

Mr C worked as a teacher in the UK for many years but retired to New Zealand. Mr C was receiving a substantial teacher's pension from the UK (more than the personal allowance), which had tax at source applied to it.

As a New Zealand tax resident, he is taxable on his worldwide income there, so Mr C also had to include his UK pension in his New Zealand tax return. However, due to his circumstances in New Zealand and the rules regarding pensions, little New Zealand tax, if any, was due on it.

The UK has a double tax treaty with New Zealand. One of the functions of the treaty is to prevent double taxation by allowing only one country to tax a source of income. In the case of Mr C's pension - this was New Zealand.

We were therefore able to make a submission to HMRC to reclaim the UK tax withheld at source and put in place a mechanism so that Mr C's pension could be paid to him in the future free from UK tax at source. operated on it.

Mr T

Mr T, a Turkish national, worked for a couple of months in the UK and received an unexpected P800 tax calculation from HMRC shortly after he left.

HMRC said that because he was a non EU national and he hadn’t spent enough time in the UK to become ‘resident’ he was not entitled to the personal allowance and was liable to UK tax at 20% on the first portion of his income.

As the payroll had actually given him the benefit of the personal allowance in his wage packet, the HMRC tax calculation actually showed that Mr T owed money back to HMRC. We were able to advise Mr T that under the UK/Turkish double tax treaty, he is actually entitled to the UK personal allowance provided he is a national and tax resident of Turkey. As soon as Mr T obtained a Turkish tax residency certificate, we sent this to HMRC and asked them to issue another P800 tax calculation. Mr T actually ended up being owed a nice tax refund by HMRC.

Mr B

Mr B, a UK national, lived in the UK all his life before retiring to France some time ago. Mr B was unable to sell his UK property before leaving for France due to the depressed housing market.

Several years later, he found a buyer for his UK house but needed to know if any part of his 'gain' would be liable for UK tax considering it wasn't his principle private residence throughout the entire duration of his ownership.

We were able to advise him that as he is selling the house whilst he is classed as non UK resident and provided he is out of the UK for five complete tax years, he will not be taxed on any gains he makes in that period - even on assets situated in the UK that were owned prior to leaving.

We were able to help Mr B report the disposal on his UK tax return correctly and make the relevant disclosures with regards to the status of these funds.

Mr V

Mr V, a Spanish national was in the UK working for several years. His UK employer wanted him to set up and run a small office back in Spain, due to his connections there.

Mr V left the UK to work in Spain full time and so became non resident from the date of his departure. However, he was still paid from the UK payroll for a short time after his departure as there was no mechanism set up to pay him in Euro.

As Mr V was physically performing his duties in Spain after his departure from the UK, these were not classed as UK source duties, but Spanish duties.

We were therefore able to file a split year tax return to reclaim the UK payroll taxes on his post departure employment income even though it was paid from the UK, by a UK company.

*The people in these case studies are fictional and the scenarios have been provided for illustrative purposes only.